Glenn and Dina have differing opinions about what should be included in the pizza party they are planning for the winning team. Glenn stresses that the budget is only $60, but Dina really wants a piñata. Glenn, on the other hand, really wants a clown at the party, but Dina doesn’t believe that’s necessary. This scene is a good introduction to the concept of budget constraints, optimization, and tradeoffs. Since Glenn and Dina have different utility functions, their willingness to purchase different items isn’t compatible.
Author: Jadrian Wooten
Economics eductor. Follow me @Wootenomics
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Dying to Get a Couch
A man died on an expensive couch in the store, but both Cheyenne and Mateo want the couch. It’s not clear who deserves the couch, so they determine the best way to allocate the couch should be based on who sits on the couch the longest. Rather than having them pay for the couch in an auction, they will pay for the couch with their time.
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Used Markets
Jonah bought a sex doll that he believed looked like Amy. He planned to dress the doll up and tease Amy throughout the day, but he realized that it got out of hand. He approaches Amy in the parking lot to apologize and show her a receipt as proof that he returned the doll. He ended up paying a very large restocking fee, more than the doll was worth, because there isn’t much of a market for used sex dolls.
Jonah actually summarizes a bit of Akerlof’s Market for Lemons paper in that he knows more about the quality of the doll (that it hasn’t been used at all) than the person who may purchase it. The collapse of the used market exists here because Jonah ends up paying money to not have the doll anymore.
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Determining Shift Assignments
Amy asks Garett to finish the shift assignments, but he’d rather finish eating his lunch. Mateo jumps at the opportunity to make shift assignments and provide retribution for wrongs that have been done.
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Transferring Burrito Capital
Glenn isn’t convinced that Dina can raise a newborn child, noting that she probably doesn’t even know how to swaddle a child. Dina thinks it’s similar to her experience at Chipotle. Her argument is that the human capital she accumulated rolling burritos would be general and transferable to taking care of a child.
A customer is having trouble identifying a new toothbrush to help with his tartar problem. With all the options available, some companies advertise as being good at fighting plaque while others focus on tartar prevention. When consumers have a lot of options, it’s sometimes hard to fully consider the tradeoffs. This paradox of choice can explain why some people don’t behave rationally when presented with a seemingly overwhelming number of options.
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Señor Cloud Salsa
Cloud 9 has developed their own brand of salsa called Señor Cloud Salsa. In an attempt to seem more authentic, the store manager is looking for employees to offer samples to customers. Glenn believes this will be a key selling point that differentiates their store brand from more recognizable substitutes in the store. Successful product differentiation gives firms some market power and the ability to charge a price greater than marginal cost.
One way firms respond to increased union efforts is through managerial opposition. Because it’s illegal to fire workers who try to unionize, firms may use alternative tactics to discourage the formation of a union. An employee has been talking about forming a union and the district manager lets Amy know that the corporate office is considering shutting down stores, and a unionized workforce would make it more likely their store could be shut down. Amy, Dina, and Jonah meet in a backroom to discuss ways to stop the unionization from proceeding.
A lot of the employees walked out while on their shift in the hopes of getting Glenn his job back. The regional manager has arrived and is working with Jonah and Amy to see how they can get the employees back to work. Initially, Amy and Jonah ask only for Glenn to have is job back, but they must sign a letter saying that they apologize for walking out. While it seems like a small request, they decide that the employees really deserve more. Part of the goal of unionization is to turn a competitive labor market into a monopoly provider of labor. Through collective bargaining, Amy and Jonah demand more for their group.
The lights are off in the store, but Dina and Glenn are searching for the manual override code to get power back online. While searching, Glenn goes through a series of older memos from the corporate office about how to keep union activity minimized. While stores cannot legally stop employees from unionizing, they have an incentive to keep unionization efforts at a minimum to keep labor costs low. The managerial opposition hypothesis is one explanation for low unionization in the US and primarily focuses on firms taking a proactive role in discouraging unionization.
Teaching with Superstore 